There are two types of federal levies on a limited range of products manufactured or produced in Canada: excise taxes and excise duties.
Excise taxes are charged on the following goods:
- Fuel-inefficient vehicles
- Automobile air conditioners; and
- Certain petroleum products
When are excise taxes charged?
When goods are manufactured in Canada, excise tax is payable at the time the goods are delivered to the purchaser. When they are imported, excise tax is payable by the importer, at the time the goods are imported.
Excise taxes apply to goods before GST/HST is added on.
Under certain circumstance, you may be able to claim a refund of the excise taxes you paid.
Excise tax license
Manufacturers need an excise tax license (“E” license) unless they qualify as a small manufacture. You qualify as a small manufacturer if your annual sales are not more than $50,000.
A wholesaler license (“W” license) allows you to buy goods for resale without paying excise taxes. But you have to collect and remit the excise tax at the time you sell the goods.